Big Five's approach may add $20b to GST compliance bill: consultant

Fear and confusion among Australian businesses about the GST is being compounded by the Big Five accounting firms' refusal to seek alternative compliance methods that could save local companies almost $20 billion in unnecessary charges.

So claims Nick Pile, an IT consulting partner at accountancy firm Pannell Kerr Foster (PKF), and a representative of Australian Taxation Office software consultant Computron and taxation reference provider CCH.

Speaking at the launch of a GST-compliant taxation software product the companies claimed could cut 80 per cent off the GST-related expenses, Pile said Computron had approached the Big Five to suggest a method that could potentially save businesses 80 per cent of the quoted GST expenditure, $19.2 billion in total, but were "promptly shown the door".

Computron, PKF and CCH executives cited the larger accountancy firms' recent estimates of $24 billion, equivalent to one third of Australia's entire annual export revenues, as the total GST-induced cost to Australian business.

Pile said the bigger accountancy firms were clinging to a traditional taxation model that was cumbersome and inefficient.

"What the traditionalists at the Big Five seem to be promoting is that if you've got a large ERP system, then you have to modify it so you can track, at a detailed level, the GST amount and the amount exclusive of GST."

He explained that according to this taxation approach, small changes to individual figures would incur lengthy "reconciliation" of data throughout entire taxation software systems, adding the GST model favoured by the ATO's Business Activities statement was based on "gross", not "detail" figures.

"When you complete your business activities statement, you basically calculate your GST payable as one eleventh of your total sales. That's a gross figure," he said. "It's based on totals, not adding up every single bloody transaction."

"The Big Five seem hell-bent on not exploring an alternative proposition," he added.

Arthur Andersen, PricewaterhouseCoopers and Ernst & Young were unavailable for comment.

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More about AndersenAndersenArthur AndersenAustralian Taxation OfficeCCH AustraliaErnst & YoungErnst & YoungPannell Kerr FosterPricewaterhouseCoopersPricewaterhouseCoopers

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